In a stunning move designed to send a message to otherwhite-collar criminals, a D.C. federal court judge last weekremanded Nicholas J. Bush, former president of the Natural GasSupply Association (NGSA), to a halfway house pending sentencing ontwo felony charges for embezzling $2.8 million from the producergroup. The judge took this action after Bush pleaded guilty to thecharges.

A U.S. marshal led a weary-looking Bush out of the courtroomfollowing his arraignment on Thursday before U.S. District JudgeEmmet G. Sullivan, who said he wanted to debunk the “perception”that “life goes on as usual” for white-collar criminals after theyplead guilty and sign plea agreements with prosecutors. “I don’tthink I’m being unreasonable” in ordering this, he told Bush’sattorney, William J. Murphy of Baltimore. “Whatever time he servesnow would be credited against his sentence.”

Sullivan’s decision came as a surprise to Murphy, who had arguedfor Bush to be released on his own recognizance pending sentencing.He said his client was a “long-standing member of his community,”had “cooperated fully with the government,” turned over his assetsas restitution to NGSA and posed no risk of flight.

Bush, who as head of the large producers lobbying group had ahigh visibility in Washington, testifying on Capitol Hill andmeeting with congressional and executive branch officials, willremain at the halfway house, the location of which was notdisclosed, until he is sentenced on Oct. 25th. The charges includeone count of tax evasion and one count of mail fraud in connectionwith a phony consulting scheme that he carried out between1983-1999 while he was president of NGSA. Specifically, Bush wascharged with using the U.S. mail to deliver to the Internal RevenueService (IRS) tax information he had altered to conceal NGSA’spayments to fictitious consultants. The payments were pocketed byBush. He also was charged with filing a “fraudulent” joint incometax return for 1997.

Each count carries a maximum penalty of five years in prisonplus fines (a maximum of $5.6 million for the mail fraud chargealone). The U.S. Attorney’s Office in D.C. has agreed to waive anyfines so that Bush can continue to make restitution to NGSA.

Under the federal sentencing guidelines, Assistant U.S. AttorneyVirginia Cheatham indicated Bush could get up to 41 months in a”minimum security” prison. However, if it can’t be proven Bushembezzled the entire $2.8 million – he contends he stole “slightlyless” than $2.5 million – and that he abused a position of trust,the former NGSA president could receive a lighter sentence of 27 to33 months, she said. There also is an unresolved issue of”sophisticated concealment” related to the tax offense that couldaffect his sentencing.

“We anticipate the guidelines to be 33 to 41 months” for Bush,Cheatham told reporters following the arraignment. Prosecutors planto argue he stole “more than $2.5 million but less than $5million,” that his fraud offense involved “more than minimalplanning,” and that he abused a position of trust. But Bush’sattorney contends his client’s “psychological makeup” and his”extraordinary effort” at restitution favor a lower sentence.

“This is going to be a complicated sentencing proceeding,”Sullivan sighed. He ordered the D.C. Probation Department tocomplete a sentencing report within 70 days, and scheduled ahearing on the sentencing issues for Oct. 18th. Whatever term isultimately decided, Sullivan told Bush “you probably will serve theentire sentence,” or at least 85% of it.

At the arraignment, Sullivan accepted a plea agreement workedout between the U.S. Attorney’s Office and Bush’s attorney underwhich Bush waived his right to have the charges against himreviewed by a grand jury. The agreement, among other things, alsopreserves Bush’s right to argue at the sentencing phase that theamount he stole from NGSA was less than $2.5 million. It furtherstipulated no “promises” were made to Bush about a reducedsentence.

Sullivan quizzed Bush about his reasons for signing the pleaagreement. “Because I am…guilty of the charges,” the 54-year-oldBush said quietly. His fraudulent activity was first discovered byNGSA in late January. Since then, he said he has been takingprescribed medication for anxiety and has been in pyschiatric care.

Upon reviewing all the terms of the agreement, Sullivan askedBush if he still wanted to plead guilty to the two felonies. Indoing so, “you will never be allowed to vote again” or be a juror.”I’ll give you a fair trial,” he promised. Sullivan reminded Bushhe would not be able to withdraw his guilty plea in the event thecourt decides to impose a sterner sentence than that suggestedunder the federal guidelines.

With Bush’s plea, the U.S. Attorney’s Office said itsinvestigation of the matter has been completed. This should “put anend to any speculation” of an investigation of Margaret Martinformerly on the Canadian Embassy staff and now an employee ofTransCanada PipeLines in Ottawa. NGSA initially charged in a civillawsuit that Martin discovered Bush’s criminal activities whileliving with him in the early 1990s, but then quickly withdrew thecharges.

After Bush left the courtroom, Sullivan asked Cheatham if theU.S. Attorney’s Office had any idea of what happened to “this vastsum of money” that Bush embezzled. “We are attempting to track[that]” now, she said, adding that much of it was spent on”personal items,” such as “food, drink travel and clothing – itemsthat do not retain value.”

Bush’s attorney told Sullivan his client has been trying to makerestitution. So far, he has sold his house in Washington D.C. forabout $800,000-$900,000. But after paying off the mortgage, onlyabout $250,000 went to NGSA. Also “sort of an agreement inprinciple” has been worked out to turn over the funds in Bush’sretirement and pension accounts, which were estimated at about $1.5million, to the producer group, according to Murphy.

However, after allowing for the taxes and penalties to beassessed by the IRS for early withdrawal of the pension funds, NGSAagain would get only a fraction of the amount. Further complicatingthe matter is the fact that Bush’s wife, who has filed for adivorce, owns an interest in the retirement money.

On the civil front, attorneys for the NGSA and Bush believe thelawsuit is “likely to be resolved” before Sept. 30th, according toa motion filed by both sides to extend discovery. “…[N]eitherparty believes that the dispute between NGSA and Mr. Bush will goto trial.” But, it said, “the addition of other persons asdefendants cannot be ruled out at this time.” The NGSA is seekingabout $3 million in compensatory damages, plus punitive damages inthe civil suit.

Susan Parker

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.